U.S. catastrophe & weather economic losses pass $1bn in February: Aon

8th March 2016 - Author: Artemis

Economic losses caused by catastrophe and weather events in the U.S. in February 2016 are expected to surpass $1 billion, while the insurance and reinsurance industry will deal with losses “well into the hundreds of millions (USD)” according to broker Aon. Severe convective thunderstorms resulted in the highest number of February tornadoes in the U.S. since 2008, according to reinsurance broker Aon Benfield’s catastrophe model development team Impact Forecasting, driving the economic losses suffered last month.

Damage as a result of tornadoes, straight-line winds and large hail was recorded in the Plains, Midwest, Southeast, Mid-Atlantic and Northeast. Virginia state saw its strongest February tornado on record.

Impact Forecasting estimates that combined economic losses for U.S. catastrophe and severe weather in February 2016 will exceed $1 billion. That figure includes damage resulting from heavy snow and ice seen during the month.

Insurance industry losses are set to reach “well into the hundreds of millions (USD)” Impact Forecasting said, which no doubt raises the prospects of some losses accumulating on aggregate reinsurance contracts which can have ILS fund participation.

Around the rest of the world February 2016 saw a fair amount of catastrophe and weather loss activity, with the most significant the strongest tropical cyclone on record for the southern hemisphere, when Tropical Cyclone Winston struck Fiji.

Economic losses from Winston are estimated at USD470 million). Impact Forecasting notes that this equals roughly 10% of Fiji’s GDP. Insurance claims were reckoned to be much lower, at a reported USD47 million.

Further European windstorms also struck during February, with windstorms Norkys and Ruzica, named locally as Henry and Imogen, bringing high winds and coastal flooding to areas of Ireland and the UK. Total combined economic losses from both windstorms have been estimated at EUR160 million (USD175 million).

Steve Bowen, Associate Director and Meteorologist at Impact Forecasting, commented that activity has perhaps been higher due to the El Niño conditions; “Despite starting to show signs of weakening in the Central and Eastern Pacific Ocean, the record-tying El Niño left its fingerprint on many global natural disaster events in February. From Tropical Cyclone Winston’s record intensity landfall in Fiji to flooding rains in California to the worst drought in decades across parts of Southeast Asia and Africa, it is clear that the El Niño phenomenon will continue to impact atmospheric and oceanic patterns in the months ahead.

“These events pose a risk of further straining government disaster recovery budgets. This will only reinforce the importance of insurance and risk analysis; particularly in countries with lower insurance penetration levels.”

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A magnitude-6.4 earthquake in Taiwan, killing at least 117 people and injuring 550 others. The Taiwan government allocated TWD25 billion (USD750 million) for recovery and reconstruction. The Financial Supervisory Commission cited preliminary insured losses at only TWD250 million (USD8.0 million).

A magnitude-5.8 earthquake struck just offshore New Zealand’s Christchurch metro region and left several people injured. The New Zealand Earthquake Commission noted 5,048 filed insurance claims.

A magnitude-5.1 tremor in the U.S. state of Oklahoma caused minor damage. The USGS cited the event was likely the third-strongest earthquake ever recorded in Oklahoma.

Worsening droughts in Vietnam, Zimbabwe, Thailand and Haiti resulted in near to USD9 billion in economic losses this month.